Impression management in annual reports of the largest european companies: A longitudinal study on graphical representations

Publikation: Beitrag in FachzeitschriftArtikelBegutachtung

30 Zitate (Scopus)


Purpose - Graphs are powerful tools which affect a reader's impression and decision making. However, graphs in annual reports have a long tradition of being designed in order to give a more favourable impression of the company's performance. The purpose of this paper is to add to the understanding of how large listed companies in Europe choose to use and misuse graphical representation. Design/methodology/approach - This comprehensive study investigates annual reports of the top 50 European companies listed in the fortune 500 index. Company reports are analysed over a period of seven years resulting in 4,683 graphs. The authors investigate the development of the three major areas of impression management - selectivity, graphical measurement distortion and presentational enhancement - individually by company as well as collectively for the entire sample. Findings - The main findings are that topics displayed, and how they are presented, significantly change over time and that graphs are much more likely to exaggerate positive trends than to understate them. Additionally, it can be found that longer time sequences (greater than five years) almost exclusively depict favourable trends (86 per cent) and graphical measurement distortions are applied on purpose for both key financial variables (KFV) as well as for non-KFV (around 30 per cent in all years). Research limitations/implications - The sample for this study are the biggest 50 companies in Europe. It is not clear, if these companies are a representative sample for all publicly traded companies in Europe. Further research is needed regarding small and medium size companies. Practical implications - The findings show that companies primarily produce graphs in order to influence the perception of their stakeholders rather than to display the topics in accordance with the "true and fair view" principle that is requested by the IASB. However, standard setters like the IASB or the FASB have not yet released any particular information on how to use graphs correctly and avoid misleading information. This study should provide a solid base for further discussions in this regard as companies still use graphs to give a favourable impression of the company and deliberately misuse them in order to achieve this aim. Originality/value - This study contributes to the research field of impression management by answering the quest for more longitudinal studies and offers an extended focus while examining not only KFV but all variables depicted in annual reports.

Seiten (von - bis)383-399
FachzeitschriftJournal of Applied Accounting Research
PublikationsstatusVeröffentlicht - 9 Nov. 2015


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